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RG 213 – The 6 Economic Indicators That Lead To Recessions w/ Logan Mohtashami

Recession Arrow

Logan is a financial writer and blogger covering the US economy, especially the housing market. C3T33PTH 300x300 He is frequently quoted in high-end publications, and is serves as a senior loan manager for AMC lending in Southern California. Logan made his first dollar at 10 years old serving ice cream in Santa Monica. He doesn’t have any formal background in finance or economics but he took business in college. He’s a third generation banker and his family have been in the industry for 7 years.

A recession is two consecutive quarters of negative economic growth but this doesn’t always mean there’s an epic crash. Logan has a model that predicts the recession and it’s his job to say when it’s time to panic. There are 6 things that have to happen before we even discuss the possibility of recession;

The 6 flag model

  1. Federal reserve typically starts it’s interest rate hike process
  2. Unemployment rate gets to a certain level
  3. Inverted yield curve
  4. Leading economic indicator goes down for 4-6 months prior to recession
  5. Housing starts to fall
  6. Over investment – over heating economy

In the US we have a barbell economy meaning it’s heavy on either side and light in the middle. We will always have a sector of young people who will always rent because this is the service economy in a lower income bracket who will never be homeowners. The big question is are we building enough apartments for this lower income bracket?

For anyone getting into real estate everyone should create budget before they start investing.  Creating this structure will ensure that you don’t overspend. Read as much as you can but not from people who have an ideological slant – it’s not politics. Forces on the data and don’t follow people who hate the fed and believe that gold is the answer. 

Top tips

Most important habit – Getting up at 4am and looking at last nights list

Most influential person – highschool basketball coach

Most important tool – Facebook

Most important failure – not following desire for economics at a young age

Contact – look up his name on any social media – same across all of them